What's happened
As of December 2025, UK and US retailers report mixed financial results amid subdued consumer confidence and economic uncertainty. Watches of Switzerland sees robust US demand and tariff relief, while Frasers Group faces UK sales declines despite international growth. Walmart raises forecasts on strong e-commerce and affluent shoppers. Target and home improvement chains report sales challenges, prompting investments and cautious outlooks.
What's behind the headline?
Retail Sector Divergence Amid Economic Pressures
Retailers are experiencing a clear split in performance driven by consumer income disparities and sector focus. Watches of Switzerland benefits from luxury demand in the US, aided by tariff reductions, highlighting how trade policy can directly influence retail fortunes. Conversely, Frasers Group's UK operations suffer from weak consumer confidence and heavy discounting, despite international acquisitions boosting overall sales.
The US Retail Landscape: Winners and Strugglers
Walmart's raised sales and earnings forecasts underscore its strength in appealing to a broad income spectrum, particularly affluent consumers leveraging faster delivery and e-commerce. This contrasts sharply with Target's ongoing struggles, marked by declining foot traffic and sales, prompting a $5 billion investment in store improvements and a strategic pivot to exclusive merchandise.
Home Improvement Sector Under Strain
Home Depot and Lowe's report subdued demand due to high mortgage rates and consumer caution, with Home Depot lowering profit forecasts. The sector's reliance on housing market health exposes it to macroeconomic vulnerabilities, with discretionary spending on renovations deferred amid economic uncertainty.
Executive Incentives and Corporate Strategy
Debenhams Group's controversial £200m executive bonus scheme amidst a 23% sales slump reflects tensions between management and shareholders, notably Frasers Group. This highlights governance challenges in turnaround scenarios and the impact of activist investors on corporate strategy.
Outlook and Consumer Impact
Retailers face a cautious consumer environment with excess inventory and subdued confidence. The bifurcation between value-focused and discretionary retailers will likely persist, influencing pricing strategies and investment priorities. Consumers may see continued promotions and store refurbishments, but economic pressures will temper spending, especially on non-essential goods.
Retailers must balance innovation and cost control to navigate this uneven landscape, with success hinging on adapting to evolving consumer behaviors and macroeconomic conditions.
What the papers say
Henry Saker-Clark of The Independent reports Watches of Switzerland's 8% revenue growth, driven by a 15% US sales increase and tariff reductions, with CEO Brian Duffy confident entering the holiday period. The Guardian's coverage of Frasers Group by an unnamed author highlights a 5.8% sales decline in UK sports retail amid subdued consumer confidence, despite international growth and a near doubling of pre-tax profits due to Hugo Boss investments. Holly Williams in The Independent details Frasers' mixed results, noting luxury division growth and international acquisitions offsetting UK store closures.
The New York Post emphasizes Walmart's raised sales forecast and 5.9% stock rise, attributing gains to affluent shoppers and e-commerce growth, with CFO John David Rainey noting a strong holiday start. Conversely, Business Insider UK and The Guardian outline Target's struggles with declining sales, reduced foot traffic, and a $5 billion investment plan to revamp stores, quoting incoming CEO Michael Fiddelke on the need to improve product availability and store experience.
Home Depot's cautious outlook is detailed by The New York Times and Business Insider UK, citing CEO Ted Decker on consumer uncertainty and housing market pressures dampening home improvement demand. The Guardian and Sky News report Asda's asset sales to manage debt amid falling sales, with union criticism of the impact on staff morale.
Debenhams Group's executive bonus scheme and sales slump are covered by Sarah Butler in The Guardian and Henry Saker-Clark in The Independent, highlighting tensions with major shareholder Mike Ashley's Frasers Group and the company's turnaround efforts.
These sources collectively illustrate a retail sector grappling with economic headwinds, consumer caution, and strategic shifts, with varying fortunes across segments and geographies.
How we got here
Retailers globally are navigating a complex environment marked by inflation, tariff impacts, and shifting consumer spending patterns. UK firms like Frasers and Watches of Switzerland contend with subdued domestic demand but find growth in international markets. US retailers Walmart and Target face a bifurcated consumer base, with wealthier shoppers driving some gains amid broader caution. Home improvement chains grapple with high mortgage rates dampening renovation spending.
Go deeper
- How are UK retailers like Frasers and Asda coping with current economic challenges?
- What strategies are US retailers Walmart and Target using to address changing consumer behavior?
- What impact do high mortgage rates have on home improvement retailers like Home Depot and Lowe's?
Common question
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Why Are US Retailers Like Walmart and Target Performing Differently in 2025?
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How Are UK and US Retailers Performing in 2025? What Does It Mean for Shoppers?
Retailers in the UK and US are navigating a challenging landscape in 2025, with some companies thriving while others struggle. Factors like consumer confidence, economic uncertainty, and strategic shifts are shaping the retail scene. Curious about which retailers are doing well, why some stores are closing, and what this means for shoppers? Keep reading to find out the latest insights into retail performance this year.
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What Are the Biggest Consumer Trends in 2025?
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How Are Retailers Adapting to Changing Consumer Confidence in 2025?
Retailers in 2025 are navigating a complex landscape marked by economic uncertainty, shifting consumer habits, and strategic adjustments. From store closures to innovative marketing, businesses are finding new ways to attract shoppers and stay profitable. Curious about what specific strategies are working now and what the future holds for retail? Below, we explore key questions about how stores are adapting in this challenging environment.
More on these topics
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Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, headquartered in Bentonville, Arkansas.
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Target Corporation is an American retail corporation. It is the 8th-largest retailer in the United States, and is a component of the S&P 500 Index.
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Frasers Group plc, formerly Sports Direct International plc, is a British retail group. Established in 1982 by Mike Ashley, the company is the United Kingdom's largest sports-goods retailer and operates roughly 670 stores worldwide.
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The Home Depot, Inc. is the largest home improvement retailer in the United States, supplying tools, construction products, and services. The company is headquartered in unincorporated Cobb County, Georgia, with an Atlanta mailing address.
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Brian C. Cornell (born 1959) is an American businessman who has been the chairman and chief executive officer (CEO) of Target Corporation since 2014. In August 2025, he announced that he would step down as CEO to Michael Fiddelke, COO effective February..
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TDR Capital is a British private equity firm headquartered in London, England.
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Asda Stores Ltd. trading as Asda, is a British supermarket retailer, headquartered in Leeds, West Yorkshire. The company was founded in 1949 when the supermarket owning Asquith family merged with the Associated Dairies company of Yorkshire.
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Mike or Michael Ashley may refer to:
Mike Ashley (businessman) (born 1964), English billionaire owner of various sports-related shop chains
Mike Ashley (writer) (born 1948), British researcher and editor of science fiction and dark fantasy
Michael Ashley
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Debenhams is a British multinational retailer operating department stores in the United Kingdom and Denmark, with franchise stores in other countries.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.